Key Talk for Short-Term Bitcoin Tonight – BLOX

Key Talk for Short-Term Bitcoin Tonight - BLOX

Today at 7:30 PM Jerome Powell, the chairman of the US Federal Reserve, will talk about raising interest rates, the state of the economy and the labor market. The stock markets seem to expect bad news, but Bitcoin and crypto have actually rebounded.

Economy, inflation and labor market

Powell will speak at a Brookings Institution event tonight at 7:30 PM UK time on the outlook for the US economy, inflation and the labor market. No details of a rate hike will be shared during this speech, but that hasn’t stopped investors from looking for clues as to when the Fed will slow the pace of rate hikes.

Why this particular speech? Because shortly afterwards inflation and job market data will be released for the past period. This data plays a major role during the December FOMC gathering, which sets the pace of rate hikes.

Any impact on Bitcoin

What does this have to do with Bitcoin? If Powell uses tonight’s speech to reaffirm that US interest rates will have to stay high longer to counter high inflation, it means the dollar is reversing its recent decline and will rise again.

We have shown in multiple analyzes that there is a high, negative correlation between the strength of the dollar and the price of Bitcoin. The bottom line is that the more the dollar is worth, the more likely Bitcoin is to fall. And the weaker the dollar, the more Bitcoin can appreciate in value.

You can see that in the correlation coefficient between the Bitcoin price in dollars and the DXY. The DXY is the value of the dollar against a basket of international currencies. This year, the indicator is mainly below 0.00, which means that Bitcoin and the dollar are moving in reverse.

Stocks are already down

Equity markets expect Powell to hint at an aggressive rate hike. While the SP500 will most likely close in the green this month, Apple and Amazon are in the red.

Apple shares fell 2.1%, a drop for the fourth consecutive session. This may also be due to recent protests against Covid-19 measures in China, including at the world’s largest iPhone factory.

Stocks of major US companies that lost more than 1% are Amazon, NVIDIA and Tesla.

By how many basis points will interest rates increase?

So investors are keeping a close eye on Powell ahead of the December meeting. Four consecutive interest rate increases of 0.75 percentage point have been implemented in recent months, and interest rates are expected to rise by ‘only’ 0.5 percentage point in December.

But if a pause in interest rate hikes is announced, it could send markets up again.

Bitcoin returns power

This once again underlines who has the power. Men in suits can turn the knobs and make everything more or less expensive for the common man. They have the power to make the financial markets explode into euphoria or, conversely, to talk into depression.

Satoshi Nakamoto learned this hard lesson during the financial crisis of 2007-2008 and designed a payment system and associated currency where nobody controls the controls.

“This is a Fed-induced recession, so if it does eventually turn, the market should move up pretty quickly,” Steve Grasso, CEO of Grasso Global, said on CNBC’s “Fast Money.”